PIP - Introducing PlotX Participation Mining

Preamble
Introducing PlotX Participation Mining

Simple Summary
An incentive program to bootstrap liquidity on the PlotX prediction markets.

Abstract
This proposal details an incentive program, called PlotX Participation Mining, that will reward a user every time he/she predicts on a PlotX Prediction market.

Each time a user takes a long, neutral or short position on PlotX prediction markets, the user will become eligible for incentives in PLOT in proportion to the number of positions they bought. The incentives can be claimed post the settlement of the market and shall be valid irrespective of whether the user wins or loses their prediction.

Motivation
PlotX protocol launched on the 13th October 2020 and has since seen 154 users participating in various prediction markets being created by Market Creators.

However a common question in the community is around - “what happens if I’m the only participant in a prediction market, and I end up losing my prediction at the settlement time?”. This is also reflected in one of the governance proposals initiated by a community member (0x3734…ebe4f) at https://govern.plotx.io/proposals/5

The default behavior of the PlotX protocol is that in the case of a single participant losing his/her prediction, the funds are moved to the DAO. These funds are then used to create a self-sustained DAO ecosystem which has to pay for the incentive of the market creator who spends gas fee for creating markets on PlotX, among other things.

In my opinion, this is a short term problem given that the protocol is 5 days old. As the protocol gains traction and user confidence, liquidity will increase. But for the protocol to gain traction it may be prudent to have rewards for bootstrapping liquidity on the prediction markets.

Taking a cue of bootstrapping liquidity from Compound Finance, COMP is given to users each time they interact with a Compound market (by supplying, borrowing, withdrawing, or repaying the asset). Similarly, Uniswap sponsors 4 markets (ETH/USDT, ETH/USDC, ETH/DAI, ETH/WBTC) by providing UNI tokens for liquidity providers in addition to the 0.3% fee.

In that spirit, this proposal of PlotX Participation Mining will allow the protocol to bootstrap liquidity by providing incentives to participants, irrespective of whether they lose or win.

Specification
For each market, the PlotX Ecosystem Fund will sponsor X number of PLOT tokens as incentives for participation. The incentives are distributed across the participants based on the positions that they hold against total positions in the market.

PLOT tokens per participant = (No. of participant positions / total positions in the market) * X

Incentives are distributed to participants across all options. This is over and above the reward pool that exists for winners as per the market participation.

Programme Details Proposed:

  • Duration = 2 weeks
  • Incentives in hourly market = 100 PLOTs
  • Incentives in Daily Market = 1000 PLOTs
  • Incentives in Weekly Market = 2000 PLOTs
  • Budget per market = 51600 PLOTs, applicable on ETH/USDT and BTC/USDT markets
  • Total Budget = 103,200 PLOTs

Rationale
In the 1st week of launch, it was observed that users fear being the 1st participant due to the fact that there could be no one else participating, meaning risk of being incorrect vs no rewards in case of being correct.

While changes are being considered to remove the loss of funds in case of sole participants being wrong, it would need changes in protocol, followed by code review and community governance leading to smart contract upgrade.

On the other hand, an incentive mechanism as described above can be implemented as part of the existing protocol design and can be executed with minimalistic UI changes (off-chain) and an on-chain governance vote for whitelisting the sponsor Ethereum address. It is to be noted that for the sake of optimizing speed, this governance vote for sponsoring markets can be passed by the Advisory Board of PlotX, which is currently constituted of Ish Goel, Kartic Rakhra & Satheesh Ananth.

While it would have been ideal that incentives are given only to participants participating via PLOT, minimalistic code changes and fulfillment of the primary purpose “increased participation” have been kept in mind in designing this proposal.

The above approach also incentivises early entrants as participation incentives are calculated based on proportional positions and early participants get a lower option pricing.

This also incentivizes participants to “Stake and Play” as it leads to more positions again.

Copyright
Copyright and related rights waived via CC0.

13 Likes

At present, gas costs are making the prediction markets on PlotX unattractive for users. At this nascent stage, bootstrapping liquidity is of prime importance to reverse that effect. This is a good step in that direction.

4 Likes

I support this proposal. At a minimum, this will help offset gas costs for users. The second point - I believe that if 1 participant makes a prediction and loses, his funds should be returned back. So it worked in alpha and everyone was happy.

4 Likes

Gas costs is a high stress situation in the Ethereum space and communities need all the support they can get to reduce that burden on protocol utilization. While engagement is made on the single party participation challenge and a long term solution is designed, a liquidity driving incentive on a short term basis is the right action.

2 Likes

I won’t comment on the exact numbers, but I like the idea of providing participation incentives.

I would suggest splitting the rewards equally among the different positions, this would give incentive for more spread positions to form, making the markets more exciting and dynamic. If this is too complex of a change for now maybe we can consider it later for long term.

An example of what I mean:

  • 999 Total plot will be rewarded as incentive for the daily market
  • Each position (bull/bear/neutral) will receive 333 incentive rewards
  • Suppose that when the market settles it has 3 bears, 1 bull and no neutrals
  • Each bear receives a portion of the 333 PLOT rewards weighted by how much they participated
  • Since the bull was alone on his position he gets the full 333 PLOT participation reward
  • The neutral position participation rewards are returned to the treasury (or maybe split between the other 2 options)
3 Likes

I understand that attracting participation in markets is essential for a product like PlotX but you also have to consider that during the early stages of a project, it needs a lot of support from the community. And right now, the community is hella focused on PLOT price. So, in a situation where: -

  • The team isn’t increasing liquidity in their own pool
  • other community members are also losing confidence and refusing to provide liquidity on their own

Introducing such a feature will further drive the community sentiment further down. As this is simply put gas compensation, which will put more, free plot in people’s hands to dump. And this will drive the price further down, which will not play well with the community.

You people are the experts, so I would love to hear your thoughts on this.

1 Like

This proposal is a step in the right direction, and should help serve to get the ball rolling with market participation when markets are first established.

I think there remains the clear problem of establishing markets and the gas fees associated with it, which I have mentioned within the following proposal (https://govern.plotx.io/proposals/3).

Also, this is a total budget of less than $5000 to bootstrap the network over a 2 week period. Can’t the team do better than this? Being first in to an hourly market to earn a portion of 100 plot means that you will probably get covered for the gas fees for participating. I think the amounts need to be raised.

3 Likes

That good, it will increase user participation and which is really needed in starting period. You need to fix a minimum amount of bet also for getting these rewards say 10$ or 100 plots minimum because if some bet with 1 plot to participate in this reward program, the purpose will be defeated. As it is zero sum game so participation will increase when there is more to win.

1 Like

Everyone,
Thanks a lot for the participation on the proposal. Some further comments:

  1. Realignment of Market Creation Incentives from 50 PLOTs by @dancube - that is being worked out in a separate PIP, to be released any moment. So let’s wait for that.

  2. Increasing amount of incentives from $5000 by @dancube - I think let’s go with this for now, and we increase if needed. This proposal is for whitelisting a sponsorship address, where more funds can be added if needed. Plus there are other plans to solve this problem.

  3. Splitting Rewards equally in different positions by @Shaft - Good idea, but a little complex at the moment, we can plan this in the near short term.

  4. On the sell pressure problem highlighted by @Sha256ma - Prediction markets are only as good as the amount of people participating in them. These incentive programs are not sustainable in the long term, but it is prudent to bootstrap liquidity for participation and that’s what this scheme plans to do. The ecosystem tokens are to be used for developing the community and I feel this will help. We have to remember that PLOT is a utility token - if token holders start using the protocol by participating in prediction markets, providing liquidity, creating markets, staking, resolving disputes - that’s when they start getting incentives.

  5. On minimum participation amount by @cryptobulls2020 - I encourage you to gather support for this idea from the community, if you feel people are confident about it, you can raise a PIP.

  6. On the refund of participation in case of single participant by @Alterseny - this was explained in this PIP and the rationale behind not making the change for now.

We are going to raise an on-chain proposal for this now, and let’s see how the experiment works!

Thanks again, really excited to see the kind of community being formed.

6 Likes

The proposal for PlotX Participation Mining has now been passed by the Advisory Board. Here’s the link of the proposal and it’s status:

Mining starts soon! We’ll see how it goes :slight_smile:

3 Likes

I think it would be fair to extend Partipation Mining Rewards to those that have participated since launch of mainnet. Thoughts?

Hi , everyone! Sorry, may be it is the subject of another branch. So I will wright my thoughts here as my thoughts concern the post above, and you correct me, please if I’m wrong. So the main purpose of the entire post is to solve the problem of liquidity. This problem is caused mainly by high gas prices (as far as I can see). Anyone would hardly wish to bet some PLOT to win for example 200 PLOT (which is now about 9 $), knowing they would pay 9 $ for the eth gas commisions. So as a temporaly measure I agree with the solution of partly compensating participants their gas costs, through creating additional hourly, daily and weekly plot liquidity. But as a permanent solution, is it technically possible to make this: 1) if someone wants to participate in PlotX preditions, he connects with his wallet and goes to his “my account section” than transfers his funds to this section from his wallet, through paying normal gas fees once. than, when he make a prediction, he doesn’t need to pay gas fees anymore, because he will transfer immediately from his account section. (as internal transaction without any commision or with a very tiny one). So, he makes as many predictions as he wants, untill he realizes that it is enough for him. Then he comes back to his “my account” section and withdraw all the money he got their, paying another gas fee for sending Plot or Eth from your platmorm to his metamask wallet. Thus, he will pay gas fees only twice, but can predict many many times without paying anything (or paying very little). And besides PlotX wouldn’t need to provide free Plots for any kinds of compensations, and the speed of making predictions will increase. So what do you think, is it possible and appropriate to implement? Unfortunately, I’m not a technical person, just a user and a PlotX supporter.

@congress-man Thanks for your detailed suggestion. This could be made possible. At the moment, all markets have a separate smart contracts and hence it requires users to predict on each market individually.

This was a thought through design consideration to reduce the risks of putting all markets in one smart contracts - however it can be further deliberated upon.

I will try to share some thoughts on this over the coming days and will probably open a new PIP.

2 Likes

Here are my thoughts as a user and tester.

Platform is great. Simple to use and price settlement is transparent.

My problem is the current gas prices. Due to the DeFi boom these are currently making the platform unusable for most users. I want to predict more but unwilling to do this with gas prices ($10 per prediction). I want to claim my rewards/winnings to use again but the gas price for doing this is currently $75. Unsustainable nobody is going to participate long term if this continues to be the case.

A good solution as described above would be have an individual wallet on plot that enables your rewards/winnings to be used on predictions rather than your ETH wallet. This would stop the need for using gas and reward frequent users.

I think the concept is excellent and platform is great but if we can’t get the users predicting it doesn’t matter how good it is

1 Like

I believe the participation mining incentive program should be extended.

The platform is still maturing and I think the program has proved itself to be successful by the uptick seen in the participation since launch.

I think users predicting at this stage of the product life cycle are giving valuable feedback to the team, as can be seen by 2 community driven PIPs already raised and the number of messages on the community channels on how the platform can improve. Thus, rewarding them via this program only seems fair.

Early participants on the platform should also be rewarded for the risk they are taking by participating at this stage when liquidity is not at it’s best.

I believe that this program is a sustainable and fair way to reward early participants and should be thus extended. Maybe a month and a half should be fine, till then the sustained participation will settle down, users will become more mature and more of UX/Gas optimizations will definitely come in.

3 Likes

Nice suggestion, pizza-coin! It seems to me a good idea to extend the participation mining. This incentive encourage people to be more active though providing partial coverage of their possible losses and gas fees. The only thing I want to suggest to this proposal is to make a weekly incentive higher, though I’m not the one who have ever used it. So it’s just my speculation, based on proportion of the market duration.

3 Likes

Show must go on friends :slight_smile:
I believe this proposal should be supported by the community.

1 Like